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“Naturally the common people don't want war; neither in Russia, nor in England, nor in America, nor in Germany. That is understood. But after all, it is the leaders of the country who determine policy, and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is to tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country.”
-Hermann Georing

And yes, we are “fed up with Washington and convinced more than 3 to 1 that the nation is heading in the wrong direction,” yet there’s “confidence that there will be better times ahead, that the classic American dream endures and hasn’t been extinguished. It’s not even at its low ebb.” Why? Because we’re in denial!
Bull market for bonds is ending

Bond investors enjoyed stellar gains for several years but that’s about to end, says Kurt Brouwer, chairman of Brouwer & Janachowski and editor of MarketWatch’s Fundmastery blog. He talks with Money & Investing Editor Jonathan Burton.

Optimism has always been the enduring spirit that made us a great nation, brought us back from overwhelming challenges and impossible odds — WW II, the Civil War, the 1776 Revolution. Yes, that spirit still burns in our soul, says the poll.

But we also know, as we said earlier in “The Death of the Soul of Capitalism,” that over the long-term, through many centuries, historians give nations an average of about 200 years before they burn out. Why? Because the “blind optimism” that makes a nation great in the early years of its rise to power and glory becomes, paradoxically, its worst enemy in the end-days.

Their arrogance traps them in a self-sabotaging cycle that weakens their resolve, makes them vulnerable to new, unpredictable challenges, ultimately destroying them from within. That happens over and over throughout history, even as their optimistic brains tell them they’re still the greatest.

So for a moment, please set aside your “optimism,” listen to our translation of Munger’s drama as a 10-scene crime-thriller about America on the “road to ruin.”
Plot notes: Warning, America is on a ‘road to financial ruin’

Turns out that like Buffett, whose tales we detailed earlier, Munger’s a good storyteller. His parable, “Basically It’s Over: A parable about how one nation came to financial ruin,” appeared in Slate magazine. Clearly he’s warning about the end of capitalism, the end of democracy, the coming end of America.

In his parable Munger calls America “Basicland … rich in all nature’s bounty.” In our recasting it as a drama, we’ll use “America” rather than “Basicland” in the narrative to drive home the full impact of Munger’s powerful message.
Scene 1: Power and wealth create false sense of invincibility

Significantly, Munger says 2012 is the turning point, a signal, the moment setting up the final crisis scene. We’ve often made a similar timing prediction, one tied to the 2012 election, and a reminder of the warning made by Jared Diamond in “Collapse: How Societies Choose to Fail or Succeed.” In the late stages of a nation’s cycle: A crisis hits. Everyone, leaders and citizens, act surprised. But it’s too late: “Civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power.” Just 20 short years to ruin?

Munger warns: “Even a country as cautious, sound, and generous as America could come to ruin if it failed to address the dangers that can be caused by the ordinary accidents of life. These dangers were significant by 2012, when the extreme prosperity of America had created a peculiar outcome: As their affluence and leisure time grew, America’s citizens more and more whiled away their time in the excitement of casino gambling.” Yes, Main Street “feels battered” while Wall Street gambling casinos generate billions.
Scene 2: Greed consumes America: Gambling replaces real work

In Munger’s brilliant parable “the winnings of the casinos eventually amounted to 25% of America’s GDP, while 22% of all employee earnings in America were paid to persons employed by the casinos” and “many of the gamblers were highly talented engineers attracted partly by casino poker but mostly by bets available in the bucket shop systems, with the bets now called financial derivatives.” Yes, the same derivative bets Buffett targeted when he warned against “financial weapons of mass destruction.”

Scene 3: Wall Street’s casinos prosper as Main Street suffers

Munger’s also not talking about just the million or so gamblers working in Wall Street’s “too political to fail” casino-banks. No, “gamblers” are also among Main Street America’s 95 million average investors, though most of the high rollers are the slick pros on casino payrolls where “most casino revenue now came from bets on security prices under a system used in the 1920s.” Think of Goldman’s trading operation that often makes $100 million profits daily, while America has close to 20% underemployed.
Scene 4: America’s side-bet debt to foreign casinos skyrockets

Now comes the crucial turning point in Munger’s crime-thriller: “Many people, particularly foreigners with savings to invest, regarded this situation as disgraceful. After all, they reasoned, it was just common sense for lenders to avoid gambling addicts … They feared big trouble if the gambling-addicted citizens of America were suddenly faced with hardship.” They were right.
Scene 5: Nations in denial rarely prepare for disasters in advance

“Then came the twin shocks,” a plot twist borrowed from “Avatar,” “Wall-E” and Al Gore, the kind of shocks that most “optimists” (especially those hell-bent on voting Obama and the liberals out of office by 2012) always deny. So, “hydrocarbon prices rose to new highs.” Munger must mean a twist like oil hitting a scene-stealing $1,000 a barrel.
Scene 6: In the later stages, get-rich-quick beats real work

America seeks the advice of the “Good Father,” a tall ex-Fed chairman who suggests “America change its laws. It should strongly discourage casino gambling, partly through a complete ban on the trading in financial derivatives, and it should encourage former casino employees — and former casino patrons — to produce and sell items that foreigners were willing to buy.” Never happen: Not as long as Wall Street’s gamblers can make more in a year trading derivatives than most Americans make in a lifetime. Why “work?”
Scene 7: Wall Street CEOs, economists, lobbyists love gambling

Sounds great, many approved, “but others, including many of America’s prominent economists, had strong objections. These economists had intense faith that any outcome at all in a free market — even wild growth in casino gambling — is constructive. Indeed, these economists were so committed to their basic faith that they looked forward to the day when America would expand real securities trading, as a percentage of securities outstanding, by a factor of 100, so that it could match the speculation level present in the United States just before onslaught of the Great Recession that began in 2008.”
Scene 8: Wall Street gamblers love Reaganomics, hate change

Though Munger and his partner got rich in this bizarre parable, his plot turns dark as America’s “investment and commercial bankers were hostile to change. Like the objecting economists, the bankers wanted change exactly opposite to change wanted by the Good Father.” Wall Street “came to believe that the Good Father lacked any understanding of important and eternal causes of human progress that the bankers were trying to serve” by leaving today’s free market gambling casino operations untouched, so it could quickly return to pre-2008 “greed is very good” reality.
Scene 9: Main Street investors join Wall Street’s ‘Happy Conspiracy’

The endgame now unfolds rapidly. Munger warns that America’s investors, workers and citizens have become so jaded they merge with Wall Street’s self-sabotaging conspiracy: “Of course, the most effective political opposition to change came from the gambling casinos themselves. This was not surprising, as at least one casino was located in each legislative district.” They “saw themselves as part of a long-established industry that provided harmless pleasure while improving the thinking skills of its customers.”
Scene 10: Politicians love Wall Street’s derivative casino: Game over!

The 86-year-old Munger is himself a metaphor for America’s version of the classic historical cycle: He was an optimist as he and Warren built their $267 billion company over four decades. But sadly, his parable, his vision of America’s future, has no optimistic finale. Rather it’s reminiscent of Diamond’s “Collapse,” Bogle’s “Battle for the Soul of Capitalism,” and so many other recent reminders about how America just went over a cliff and how Wall Street’s casino-banks will soon drive us off a bigger cliff into the Great Depression II by 2012.

Munger’s parable is more than a Hollywood suspense-thriller, it’s another example of the classic historical life-cycle of a nation.

In the final scenes “politicians ignored the Good Father one more time,” the casino-banks returned to gambling in derivative “securities with extreme financial leverage. A couple of economic messes followed, during which every constituency tried to avoid hardship by deflecting it to others. Much counterproductive governmental action was taken, and the country’s credit was reduced to tatters. America is now under new management, using a new governmental system. It also has a new nickname: Sorrowland.”
Epilogue: Your moral dilemma: a no-win scenario or historical destiny?

Do we really have a choice? Ask yourself, what’s ahead after 2012? Can you see beyond a destructive campaign: Obama at war with Palin and the “Tea Party of No?” What are the long-term prospects of our “civilization.” Do you share Munger’s dark vision?

Or does the USA Today/Gallup Poll tell you guys like Munger, Buffett and Volker do “lack any understanding of important and eternal causes of human progress that the bankers are trying to serve” with their gambling casinos. “Optimists” in those polls are just politicians, bankers and citizens like you, in denial, can’t hear the warnings. So we get no changes, no action, no preparations because at this stage in the long-term historical cycle, optimism has turned into our worse enemy, wishful-thinking.

10:46 AM EST – 2/10/10

By Suadad al-Salhy

BAGHDAD (Reuters) – The U.S. military freed a Reuters photographer in Iraq on Wednesday, almost a year and a half after snatching him from his home in the middle of the night and placing him in military detention without charge.

The U.S. military has never said exactly why it detained Ibrahim Jassam Mohammed — who worked for Reuters as a freelance TV cameraman and photographer — and locked him away for so long, saying the evidence against him was classified.

“How can I describe my feelings? This is like being born again,” Jassam told Reuters by telephone as he was greeted emotionally by his family.

U.S. and Iraqi forces smashed in the doors of Jassam’s house in Mahmudiya town, south of Baghdad, in September 2008 and whisked him away, first to Camp Bucca, a desert prison on the Iraq-Kuwait border, then the smaller Camp Cropper detention center near Baghdad airport.

Jassam is one of several Iraqi journalists working for foreign news organizations who have been detained by the U.S. military, often for months at a time, since the 2003 U.S. invasion. None has ever been charged, triggering criticism from international journalism rights groups.

“I am very pleased his long incarceration without charge is finally over,” Reuters editor-in-chief David Schlesinger said.

“I wish the process to release a man who had no specific accusations against him had been swifter.”

In Mahmudiya, friends and relatives crowded into Jassam’s small family home, greeting him with hugs, tears and sweets.

“I still cannot believe my son is next to me,” said his mother, Fadhila Alwan. “Thanks be to God. I cannot speak. I will keep him in my arms for days but I will not be able to get enough of him.”

‘SECURITY THREAT’

The U.S. military has asserted that Jassam was a “security threat” because of “activities with insurgents,” it said last year, without giving details.

The term “insurgents” generally refers to Sunni Islamist groups. Jassam is a Shi’ite Muslim.

The military said on Wednesday he was freed under a security pact, effective last year, which required the United States to hand over its thousands of Iraqi detainees to Iraqi authorities.

“As such, detainees that are approved for release by the government of Iraq will be released according to their threat level. It was his time to be released,” the U.S. military said.

The U.S. military still has almost 6,000 detainees who must be handed to Iraqi authorities. If they face Iraqi criminal charges they will be tried, if not they will be freed.

The Iraqi Central Criminal Court ruled in 2008 that there was no case against Jassam.

A month before arresting him, U.S. forces detained Reuters cameraman Ali Mashhadani and held him for three weeks without charge, the third time he had been detained.

“This is happy news but at the same time sad news,” said Ziad al-Ajili, head of The Journalistic Freedoms Observatory, and Iraqi press lobby group. “Who is going to compensate Ibrahim for the 17 months he spent in prison innocent of all the accusations the American army made against him?”

Don’t open your eyes
You won’t like what you see
The blind have been blessed with security
Don’t open your eyes
Take it from me
I have found you can find
Happiness in slavery Nine Inch Nails-Happiness in Slavery

Think you’re free? Think again, slave!

This week the Federal government will attempt to auction off 118 billion dollars in U.S. debt to anyone who thinks the U.S. dollar is a great place to be. Of course if you ask liars like Fed Chief Ben Bernanke or his young sidekick “tiny” Tim Geithner, they will most certainly assure you that the dollar is strong and that the U.S economy is on a miraculous rebound. But this is fiction.

Lets do our own risk assessment, shall we? After all, barring any foreign investors stupid enough to take the bait, it’s going to be you and I… and several generations of our descendants left holding the check as the fat gluttons on Wall Street lick their plates before dashing out of the restaurant. But I warn you; what you are about to read is nothing short of horrifying and should convince you – once and for all – that we are in the final stages of a freefall spiral into outright despotism.

Stewart Dougherty is a specialist in inferential analysis, the practice of identifying historic and contemporary patterns and then extrapolating their likely effects upon the future. In his recent piece, “America’s Impending Master Class Dictatorship”, Mr. Dougherty crunches some numbers for us and finds:

“According to the Federal Reserve’s most recent report on wealth, America’s private net worth was $53.4 trillion as of September, 2009. But at the same time, America’s debt and unfunded liabilities totaled at least $120,000,000,000,000.00 ($120 trillion), or 225% of the citizens’ net worth. Even if the government expropriated every dollar of private wealth in the nation, it would still have a deficit of $66,600,000,000,000.00 ($66.6 trillion), equal to $214,286.00 for every man, woman and child in America and roughly 500% of GDP. If the government does not directly seize the nation’s private wealth, then it will require $389,610 from each and every citizen to balance the country’s books.”

Sorry, but I don’t have that kind of scratch! Few of us do! And though we should feel no obligation to pay this debt, we still must bear some of the responsibility for allowing it to happen. Somewhere along the way our ancestors dropped the ball. Our fathers failed to heed the warnings of great men. They allowed their words to echo down the memory hole into oblivion only to be replaced with the words of actors, sportscasters and anchormen. They allowed great texts and historical documents in our schools to be substituted with training manuals and rulebooks for the enslaved. Their apathy has delivered us into dependence, and from there we are entering back into the final stage of a never-ending fatal sequence: bondage.

Democracy may well be the worst of all forms of government. We are often told of the virtues of democracy and taught that it was under its principles that this nation was founded. But that is not true. We were born a Republic; a representative form of government designed to protect the rights of the individual. However, from the day of our nation’s founding, insidious forces within and from without have incrementally caused our government to deteriorate into a democracy. Where once the center of power was concentrated in our elected representatives in the House and senate, that power has now been usurped by the Executive Branch. The vast majorities of Americans have considered their vote for the presidency as the single most important elected office, and as a result, have rendered their sovereignty to that single entity.

The office of the President has become a seat of power. Through signing statements and a self appointed “executive privilege”, the President has become a ruler rather than a servant of the people who acts upon the direction of Congress.

Though the author of the following passage is unknown, it has been quoted as part of a speech given in 1943 by American Industrialist H.W. Prentis though much of what he said has been attributed to late 18th Century writer Andrew Fraser Tytler. Regardless of who or when it was said, it certainly seems prophetic now in relation to the situation we currently find ourselves in…

“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world’s greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:

· From bondage to spiritual faith;
· From spiritual faith to great courage;
· From courage to liberty;
· From liberty to abundance;
· From abundance to complacency;
· From complacency to apathy;
· From apathy to dependence;
· From dependence back into bondage.”

That last part, that has come to be known as the “Tytler Cycle”, could be used to chronicle our nation’s rise and fall from the day our ancestors fled the tyranny of King George (from bondage to spiritual faith), the American Revolution (from spiritual faith to great courage), the Declaration of Independence (from courage to liberty), the Industrial Revolution (from liberty to abundance), the signing of the Federal Reserve Act (from abundance to complacency), the Great Depression (from complacency to apathy), the entry into the United Nations (from apathy to dependence) and everything that has happened since: the endless wars, socialism/facism, the CIA, etc., etc., etc. … (from dependence back into BONDAGE!)

Should we accept our fate? Surely we can adapt. A frightening number of men and women whom have received long-term confinement in our nation’s prison system succumb to a thing known as “institutionalized syndrome” characterized by a loss of independence and self-confidence, erosion of desire and skills for social interaction and fear of authority. Upon the prospect of release many prefer to stay in that nightmarish environment rather than face the world alone due to excessive reliance on these institutions to provide food, clothing and shelter. Could this be where we are headed?

And what of our destiny? Will we go the way of North Korea, a communist regime that controls it’s population through hunger and fear? One only needs to read accounts of daily life in it’s largest city, Pyongyang to conclude that this is precisely what our masters have in store for us. Imagine living in tiny living quarters within towering, drab apartment complexes that siphon intermittent supplies of water and electricity while reliably feeding government propaganda through living room speakers that can never be fully turned down. A place where no citizen is allowed to drive or even own a bicycle. A place where rations of food are so miniscual that hunger and starvation are commonplace.

And though I suspect that none of us will live long enough to be forced to live under such harsh conditions, is it acceptable to use that as an excuse to leave that fate to our children? Perhaps for some of you it is. Perhaps the work that lies ahead of us is an insurmountable task. Perhaps the victories of our enemy have caused you to become complacent, even apathetic in your own personal “Tytler Cycle”? If so, then I wish you well. Hopefully you will find comfort in the distractions provided to you by our social engineers. And although you may find your liberty in short supply, be comforted in the fact that there will always be an abundance of drugs, sports, music and all manner of entertainment to keep your buzz going through these tumultuous times.

If you accept this conclusion then I offer, in parting, these words from Samuel Adams:

“If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen.”

by Noel Brinkerhoff

Friday, February 05, 2010

Being a U.S. citizen will not spare an American from getting assassinated by military or intelligence operatives overseas if the individual is working with terrorists and planning to attack fellow Americans. This policy was acknowledged by Director of National Intelligence Dennis Blair while testifying on Wednesday before the House Intelligence Committee. Blair tried to reassure lawmakers that the government would be careful before making the decision to kill Americans. “I just don’t want Americans who are watching this to think that we are careless about endangering—in fact, we’re not careless about endangering American lives as we try to carry out the policies to protect most of the country,” Blair said One of the Americans most likely to be targeted is U.S.-born cleric Anwar al-Aulaqi, now living in Yemen. Born in New Mexico, al-Aulaki earned a B.S. in Civil Engineering at Colorado State University and an M.A. in Education Leadership at San Diego State University. He has has been linked to the Fort Hood shooter, Army Major Nidal Malik Hasan, and to Abdul Farouk Umar Abdulmutallab, the Nigerian accused of attempting to blow up a Northwest Airlines plane on Christmas Day. Apparently the U.S. did try to kill al-Aulaki in an air strike in Yemen the day before Abdulmutallab’s attempted plane bombing, but it would appear that he is still alive. -Noel Brinkerhoff Intelligence Chief Acknowledges U.S. May Target Americans Involved in Terrorism (by Ellen Nakashima, Washington Post) US May Kill American Extremists Abroad (Agence France-Presse) Imam Says Fort Hood Killer Asked about Killing GIs a Year Ago.

Afghanistan Geological Survey Members performing a song at Geologist`s Day ceremony, April 2005 (photo: USGS)

What would a modern American war be without an economic exploitation angle? While Iraq has long been characterized as a war for oil, Afghanistan has been portrayed as a security-based conflict rooted in a mission to cripple al-Qaeda and its Taliban allies. But a recent declaration by Afghan President Hamid Karzai has given the war in his country a new perspective, assuming his promises of enormous natural-resource wealth prove to be true.

Karzai insists his countrymen may be sitting atop more than $1 trillion in minerals and oil reserves, which could turn one of the poorest countries on the planet into one of the wealthiest. “The initial figures we have obtained show that our mineral deposits are worth a thousand billion dollars—not a thousand million dollars but a thousand billion,” Karzai told the media on Sunday.

China has not wasted any time getting into the country and exploiting some of the copper reserves. In 2007, the Chinese-owned Metallurgical Group Corporation signed a $3 billion, 30-year contract to develop the Aynak copper mine, one of the world’s largest. Another Chinese company, as well as several from India, are vying for the rights to mine iron ore at the Hajigak site in Bamiyan province, north of Kabul.

WASHINGTON (Reuters) – In unusually frank comments, the top U.S. intelligence official acknowledged on Wednesday that spy agencies can target for killing Americans who are involved in terrorism.

“We take direct action against terrorists, in the intelligence community,” Dennis Blair, director of national intelligence, said.

“If … we think that direct action will involve killing an American, we get specific permission to do that,” he told the House (of Representatives) intelligence committee.

Blair did not mention where the permission came from.

The Washington Post reported last week that President Barack Obama approved a December 24 strike against a compound in Yemen where a U.S. citizen, Anwar al-Aulaqi, was believed to be meeting with regional al Qaeda leaders.

He was not the focus of the strike and was not killed, but is now on a list of targets, the newspaper said. The American advisers in Yemen do not participate in raids but help plan missions and provide weapons, the newspaper report said.

The CIA and the U.S. military’s Joint Special Operations Command maintains lists of individuals they seek to kill or capture, and both lists included at least three Americans, The Washington Post said.

The comment on American targets in a public setting is highly unusual from a current intelligence official and even the congressman asking the questions was caught by surprise.

In making such decisions, “whether that American is involved in a group that is trying to attack us, whether that American is a threat to other Americans, those are the factors involved,” Blair said.

“We don’t target people for free speech. We target them for taking action that threatens Americans,” he said.

“I’m actually a little bit surprised you went this far in open session,” Republican Congressman Peter Hoekstra said.

Blair replied: “The reason I went this far in open session is I just don’t want other Americans who are watching to think that we are careless about endangering — in fact we’re not careless about endangering lives at all — but we especially are not careless about endangering American lives as we try to carry out the policies to protect most of the country.”

New York Attorney General Andrew Cuomo said Thursday it was bringing civil charges against senior Bank of America (BAC) executives, including former company CEO Ken Lewis, for their role in the company’s controversial purchase of Merrill Lynch.

Cuomo’s office, which has been aggressively pursuing an investigation into the merger and subsequent bonuses paid to former Merrill employees, said it was charging Lewis and Bank of America’s former chief financial officer Joe Price with fraud.

The lawsuit contends that the bank’s management team understated the losses at Merrill in order to get shareholders to approve the deal, then subsequently overstated the firm’s willingness to terminate the merger to regulators weeks later in order to get $20 billion of additional aid from the federal government.